Foundation of Business Law
Charlie is going to rescind the contract. He demands return of his money and compensation for the loss of commission on several high profile sales of his business. He wants to rescind the contract because the package of software recommend by Carmine was obsolete, despite Carmine’s assurances.
This problem is concerned with the contents of the contract which is term in the contract, the misrepresentation and unconscionable conduct.
Charlie will claim that Carmine verbal assurances about the condition of the package of the software which recommended by Carmine was unable to utilise the Land Titles Office’s electronic lodgement of documents. Carmine will refer to the written contract which contains a clause that there is no warranty is given about or the quality of the software. But the parol evidence will support Carmine’s contention that the contract between Charlie and Carmine which contains all the terms of the agreement.
As these terms are clear and unambiguous, but there are no evidence can be admitted to change their contract. Charlie will claim that the “Contract of Sales” because that contract between he and Carmine was no in complete record. He will persist that it is an unclear and ambiguous written contract. If want applying the guidelines for the incorporation of oral terms it should show the guarantee about the software package in the term of the contract: * Timing of the statement Before signing the contract, Carmine have already assured Charlie.
About that the software package was widely used by several of well-established real agencies in South Australia and was “more than adequate for a small agency which was treated as a term: Van den Esschert v Chappell (1960) WAR 114. * Where one of the parties has special skill and knowledge Carmine is a representative of Realtor Data Ltd which is a computer company that specialises in software for the real estate industry. So he has more knowledge and skill about the software than Charlie: Dick Bentley Productions v Harold Smith Motors (1965) 1 WLR 623. * Importance of the statement
Before signing the contract, Carmine has already repeated a request for assurance that the software can download all the conveyancing forms necessary for electronic lodgement at the Lands Titles Office, in the statement about the software was very important in the minds of both parties: Couchman v Hill (1947) KB 554. * Reduction of the term into writing The court will ask Charlie, why he does not persist to record the term in the written Contract of Sale: Routledge v Mckay (1954) 1 All ER 855. Charlie was unaware about the package of the software because he only has a basic knowledge about the software.
Charlie can claim that the promise made by Carmine: ‘he assured Charlie would meet all his agency equipment’, it is a term of a separate or collateral contract which is supported by the consideration of entering into the main contract: De Lassalle v Guildford (1901) 2 KB 215. The requirements of a collateral contract are as follow: * Promissory statement In the statement must have been promissory: JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435. Carmine has already assured Charlie that he would meet all his agency requirements, which have already makes a promissory to Charlie.
That mean the package of software can help Charlie download all the conveyancing forms necessary for electronic lodgement at the Charlie’s office. * Intention The promissory statement must have induced the other party to enter the contract: J Evan & Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976) 1 WLR 1078. Charlie had signed and entered into the contract because Carmine assured Charlie that the package of software was widely used by several companies in South Australia and it is adequate for a small agency. Besides hat, Carmine also assured that Charlie would meet all his agency requirements. So, Charlie was induced and signed the contract. * No inconsistency There must be no inconsistency between the collateral contract and the term of the main contract: Hoyts v Spencer (1919) 27 CLR 133. This is an area difficultly for Charlie because the written contract does not record the oral promissory made by Carmine. Charlie asked Carmine that is the software suitable for his company use and Carmine has assured Charlie that it is suitable for his company but this is not written in the contract.
Charlie has signed the contract without noticing that parol was not recorded in the written contract. If he sign the contract that means he has confirm the contract. Charlie would succeed in an action for misrepresentation. Carmine has made a statement of fact about the package of software (‘this package is widely used by several of well-established real agencies in South Australia wand was more than adequate for a small agency’) that is false and which has induced Charlie to signed and entered the contract. As a result of Carmine misrepresentation Charlie has suffered loss and damage of his company.
It is fraudulent misrepresentation because Carmine knew that the package of software had already obsolete and had lie to make the sale. Charlie can rescind the contract and claim loss in the tort of deceit: Derry v Peek- Graw 12. 7. 2). Charlie can rescind the contract for unconscionable conduct. Carmine has destroyed the inequality in bargaining power that exists between him and Charlie. He is in much stronger position as a software dealer compared to Charlie who is in the weaker position as he just has basic knowledge of the software: CBA v Amadio (1983) 151 CLR 447.
Conclusion * The parol evidence rule support Carmine contention that the contract between Charlie and Carmine contains all the terms of the agreement. * Charlie would argue that the contract is partly written and partly oral contract, so that is an incomplete contract. * Charlie can seek rescission of the contract and claim Carmine that his damages in tort of fraudulent misrepresentation. * Charlie can rescind the contract between him and Carmine. References Foundation of Business Law 2012